Del Monte defers IPO of US subsidiary

MANILA, Philippines — Del Monte Pacific Ltd. (DMPL), a Singapore and Philippine-listed company, has deferred the initial public offering (IPO) of its US subsidiary Del Monte Foods Inc. (DMFI).

Last year, DMPL said that the DMFI IPO was targeted for completion during the company’s fiscal year 2024 which ended last in April.

On reinitiating the IPO of DMFI, DMPL said it would revisit the matter “when management restores profitability at DMFI and if market conditions become more favorable.”

DMPL said DMFI’s core categories in the US experienced a slowdown, most notably starting around January 2023, which then extended into and impacted fiscal year 2024.

According to the company, contributing factors included consumers eating out more and pantry loading less, sharp inflation and other economic factors like the reduction in COVID-related stimulus.

“While we anticipated a reduction in demand, DMFI did not anticipate the speed and degree to which consumption behavior patterns would change,” DMPL said.

“DMFI’s categories’ agricultural timelines made it more difficult to timely adjust volumes based on these changing demand signals. However, it appears that DMFI’s categories have started to rebound, with equivalized sales volume trends improving starting around January 2024,” it said.

DMPL swung in the red in its 2024 fiscal year ending April, incurring a net loss of $127.3 million, reversing the net profit of $17 million in the prior year.

The group still expects to incur a net loss for its fiscal year 2025 although at a reduced amount. It sees a return to profitability by fiscal year 2026.

DMPL said its board has mandated several initiatives in fiscal year 2025 that include sale of assets at DMFI and raising additional equity at Del Monte Philippines Inc.

Both the Del Monte Group’s US and Philippine businesses have previously considered going public, but such plans have yet to materialize.

Earlier this month, DMFI secured a fresh financing arrangement of up to $240 million to support growth opportunities.

DMFI and some of its existing lenders were able to complete a new financing arrangement, which involves a term loan facility for DMFI subsidiary Del Monte Foods Corp. II Inc. (DMFC).

The new term facility provides DMFC with $210 million of first-out new money financing.

It likewise includes the potential for further borrowings in the amount of $30 million in the future “under certain circumstances where a parent contribution is not made.”

The new term loan facility will enhance DMFI’s liquidity and improve its ability to meet short-term obligations and fund operational needs more effectively.